Mortgages in Holland (Netherlands)
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Mortgages in Holland - Complete Guide
Holland (Netherlands) is becoming an increasingly popular location for a holiday home due to it's distance from the UK and the number of British inhabitants. Amsterdam is only an hour away by boat or plane, and property canalside is proving desirable.
Buying Process
Once an individual has found a suitable freehold property in the Netherlands, a purchase agreement is then required to bind both parties to the real estate purchase. The sale of the property is transferred under separate contract by an official notary who will conduct searches at land registry and register new ownership.
It is also possible for a buyer to enter into an option right to purchase a property or have the first right of refusal on that property.
Mortgage types
Mortgages in the Netherlands are usually arranged for a term of either twenty or thirty years, with a range of different terms available. These include: mortgages with linear redemption (under which the loan is repaid in equal instalments) with the amount of interest payable being reduced over time and annuity mortgages, in which the earlier payments consist mainly of interest and the later instalments mainly redemption.
There are also various forms of endowment mortgages. These involve interest-only payments being made by the borrower during the mortgage term, while the mortgage is paid off in a lump sum on maturation of a with-profits endowment policy at the end of the term.
However, these mortgages are only suitable for people who are planning on staying in the Netherlands for more than 3 or 4 years. Those that plan on staying in the country for less are unlikely to reap the benefits of a with-profits endowment policy.
The type of mortgage available often depends on the following factors:
- The length of time that the property owner (if an expat) plans to stay in the Netherlands.
- Whether the owner wants to benefit from larger amounts of tax relief on the interest in the early stages of the mortgage, or spread the tax relief throughout the duration of the mortgage period.
Levels of Borrowing
The majority of Dutch banks and mortgage providers will normally allow an applicant to borrow up to 80-85% of the buying price.
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